U.S. Banks Officially Enter Crypto Trading: Bitcoin to Become a Mainstream Asset

On December 9, 2025, the U.S. Office of the Comptroller of the Currency (OCC), the primary federal regulator for national banks, released Interpretive Letter No. 1188. This non-binding guidance clearly states that national banks can legally engage in cryptocurrency trading under the “riskless principal” model, as part of their core banking activities, within the framework of existing laws (particularly Section 24, Seventh, of Title 12 of the U.S. Code).

This marks an important step towards integrating digital assets into the traditional banking system, continuing the OCC’s approval of crypto custody and stablecoin-related activities since 2020, reflecting the broader regulatory “thaw” under the pro-crypto policies of the Trump administration in 2025.

What is the Riskless Principal Trading Model?

Definition: The bank acts as an intermediary, buying cryptocurrency from one client (such as a seller) at one price and selling it to another client (such as a buyer) at an agreed-upon price. The bank does not take these assets into its inventory and does not bear the market risk from price fluctuations—transactions are immediately hedged, and the bank profits solely from the spread or transaction fees.

Key Difference from Proprietary Trading: Unlike proprietary trading (where the bank bets on price movements) or market-making based on inventory (where the bank holds crypto assets), this model minimizes risk exposure. The bank may only briefly hold assets in “rare cases” (such as during settlement).

Analogy: This is similar to the riskless principal trading model that banks currently employ in the securities, forex, or derivatives markets, now applied to crypto assets based on distributed ledger technology (DLT). The OCC emphasizes its “technology-neutral” stance, meaning whether or not blockchain is used does not affect the legality of such activities.

This guidance comes in response to numerous inquiries received by the OCC’s licensing division. In 2025 alone, 14 crypto companies (such as Coinbase, Circle, and Ripple) applied for national bank or trust licenses.

Compliance and Risk Management

Banks must conduct this business in a safe and sound manner, adhering to the following requirements:

• Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) Requirements: Enhanced due diligence is required to address the risks associated with the anonymity of crypto assets.
• Third-Party Risk Management: Effective oversight of third-party providers (such as blockchain networks or custodial services).
• Transaction and Operational Controls: Limit settlement risks (e.g., counterparty defaults during transaction execution). The OCC notes that these risks are comparable to those found in existing forex/derivatives businesses.
• No Prior Approval Required: Unlike new business models, banks can engage in this activity without prior approval from the OCC, though it will be subject to regular oversight and examination.

The OCC believes that as long as banks follow established procedures, the risks associated with these activities are low, and thus no new rules have been imposed.

Impact on Banks, Crypto Markets, and Clients

• For Banks: It lowers the entry barrier, allowing them to create hybrid business models (e.g., “custody + trading”). Conservative institutions can now offer crypto services without building full-fledged exchanges, potentially increasing revenue from wealth management and corporate clients. However, this also forces banks to invest in compliance infrastructure.
• For the Crypto Market: It expands the regulated liquidity channels, reducing reliance on offshore or unregulated platforms. This could narrow the trading spreads and improve efficiency through tokenized settlement pathways. This also aligns with the OCC’s November 2025 guidance allowing banks to hold a small amount of native tokens (e.g., for paying Gas fees).
• For Clients: Clients can now participate in crypto trading more securely through FDIC-insured banks, reducing the risks associated with “wild growth” in the market. Both retail and institutional users can achieve seamless integration (e.g., trading Bitcoin and stocks on the same platform).

Broader Context:

This guidance aligns with other 2025 regulatory trends, including the Commodity Futures Trading Commission’s (CFTC) expanded spot market oversight and Ripple’s push for stablecoins as collateral. Critics argue that this guidance does not cover proprietary trading or full custodianship of highly volatile assets.

Background and Timeline

This is not a signal of “laissez-faire” or complete deregulation of crypto activities—risk control remains the focus. However, it is undoubtedly a key green light for institutions to adopt crypto assets on a large scale.

Core Implications and Practical Effects of Interpretive Letter No. 1188:

1. Institutional Breakthrough: Granting Banks the “Pass” to Legally Engage in Crypto Trading

• Clarification of Legal Status: The OCC formally confirms that national banks can include “riskless principal model” crypto asset trading within the scope of “banking activities” defined in Section 12 U.S.C. § 24(Seventh).
• No Prior Approval Needed: Banks can initiate these activities on their own, subject to regular oversight, significantly lowering compliance barriers.
• Policy Continuity: Following the 2020 custodial approval and the November 2025 permission to hold native tokens for Gas fees, this further opens the “trading” segment, completing the “hold-custody-trade” loop.

2. Reshaping Market Structure: Promoting Deep Integration Between Traditional Finance and the Crypto Ecosystem

• Introduction of Regulated Liquidity: Banks entering the trading space as high-credit entities will attract institutional capital from unregulated CEXs (e.g., offshore exchanges) to compliant channels.
• Catalyzing “Hybrid” Financial Services: Clients will be able to manage both fiat and digital assets (e.g., Bitcoin) within the same bank account, offering true one-stop wealth management.

3. Enhanced Investor Protection and Market Confidence

• Indirect FDIC Backing: While crypto assets themselves are not covered by deposit insurance, using FDIC-insured banks for transactions significantly boosts user trust in platform security.
• Stronger AML and Risk Controls: Banks must implement BSA/AML compliance and third-party risk management, which helps curb illicit flows and improves the “wild growth” image of the industry.
• Attracting Conservative Capital: Institutions, such as pension funds and family offices, that previously avoided crypto markets due to compliance concerns may now cautiously enter through bank channels.

4. Driving Industry Standardization and License Competition

• Incentivizing Bank-Owned Crypto Subsidiaries: Companies like Coinbase, Circle, and Ripple are likely to accelerate applications for national bank or trust licenses, enabling them to engage directly in trading.
• Pressuring Existing Exchanges to Improve Compliance: Non-bank platforms that fail to offer comparable security and compliance will be at a disadvantage in the B2B and institutional client race.
• Paving the Way for Future Legislation: OCC’s “technology-neutral” stance (i.e., not differentiating based on blockchain use) sets a regulatory precedent for Congress to create a unified digital asset law.

5. Limitations and Uncovered Areas

• ❌ Excludes Proprietary Trading: Banks are still not allowed to speculate on crypto asset prices using their own funds.
• ❌ Not Full Custodianship Authorization: Custodianship of highly volatile assets (e.g., altcoins) still requires case-by-case evaluation.
• ⚠️ Operational Risks Remain: Even though the “riskless principal” model theoretically carries zero exposure, temporary holding during extreme network delays or smart contract failures may expose banks to price fluctuations.

Interpretive Letter No. 1188 is not a “free pass” but rather a “channel fix”—it does not open all floodgates but provides a clear path for compliant flows of crypto adoption. This step indicates that the U.S. is shifting from “avoiding crypto risks” to “guiding crypto integration into the financial system,” marking one of the most significant institutional advancements in global crypto regulation in 2025. This also lays the groundwork for potential future developments like spot ETF expansion, stablecoin legislation, and cross-chain settlement infrastructure in 2026.

Author Bio: The author, Lao Sun, is a multilingual cryptocurrency and Web3 observer, content creator, and industry evangelist based in Hong Kong. Fluent in Chinese, English, and French, he is dedicated to interpreting the development trends of the global blockchain ecosystem from a cross-cultural perspective, with a particular focus on Hong Kong’s unique positioning and potential as an international financial hub in the Web3 wave.

Article Link: https://mp.weixin.qq.com/s/cJiXgYC1Rs_esNB-EzODRA

Disclaimer:This article is reposted content and reflects the opinions of the original author. This content is for educational and reference purposes only and does not constitute any investment advice. Digital asset investments carry high risk. Please evaluate carefully and assume full responsibility for your own decisions.